How Much House Can I Actually Afford?

How Much House Can I Actually Afford?

One of the first questions almost every buyer asks is:

“How much house can I afford?”

And there are actually two very different answers.

A lender can tell you how much you may be able to borrow.

But only you can decide how much you can comfortably live with.

Those numbers don’t always match.

Your Approval Is Not Your Budget

Getting preapproved for a certain amount doesn’t mean you should spend that amount.

A lender is looking at things like your income, debts, credit history, assets, and loan guidelines.

You are looking at something much bigger:

What kind of life do I want to have after I buy this house?

You still have groceries.

Utilities.

Cars.

Insurance.

Repairs.

Entertainment.

Vacations.

Retirement savings.

Unexpected expenses.

And, yes, life.

A house should be part of your financial life—not the thing that controls your entire financial life.

Start With the Monthly Number

Instead of starting with:

“What price range can I buy?”

Start with:

“What monthly housing payment would I feel comfortable making?”

That number should leave you enough breathing room to handle normal life and the occasional surprise.

Remember that your total housing expense may include:

  • Principal
  • Interest
  • Property taxes
  • Homeowners insurance
  • Mortgage insurance, if applicable
  • HOA or association fees, if applicable
  • Other property-related expenses

A $400,000 house doesn’t automatically have the same monthly cost as another $400,000 house.

Taxes, insurance, interest rate, HOA fees, and other factors matter.

Don’t Forget the Cost of Owning the House

Renting and owning are different.

When something breaks in a rental, you may call the landlord.

When something breaks in your house, you’re the landlord.

That means you need to think about:

  • HVAC repairs or replacement
  • Plumbing
  • Appliances
  • Roof maintenance
  • Landscaping
  • Electrical repairs
  • Routine maintenance
  • Unexpected repairs

You don’t necessarily need to have thousands of dollars sitting around for every possible problem.

But you should have a plan for handling them.

What About Everything Else You Want to Do?

This is the part I really want buyers to think about.

If buying the maximum amount a lender approves means:

  • You can’t save
  • You can’t travel
  • You can’t help your kids
  • You can’t contribute to retirement
  • You can’t handle an unexpected bill
  • You have to work extra hours just to keep up
  • You feel stressed every month

then the house may be too expensive for you, even if you technically qualify for it.

There’s nothing wrong with buying less house.

In fact, sometimes buying less house gives you a lot more freedom.

A Comfortable House Is Better Than a Stressful House

You don’t get extra points for spending every dollar you qualify for.

Your goal isn’t to impress the lender.

Your goal is to buy a home that fits your life.

That might mean buying at the top of your range.

Or it might mean buying considerably below it.

There isn’t one right answer for everyone.

A Good Conversation to Have Before You Shop

Before we start looking at houses, I want you to be able to answer:

What monthly payment feels comfortable to me?

How much do I want to keep in savings after closing?

What other financial goals do I have?

What expenses do I already have every month?

How much room do I want for the unexpected?

What am I willing to give up—and what am I not?

Those answers are often more important than the number on a preapproval letter.

One More Important Thing

Your lender is an important part of this process.

Your lender can help you understand what you qualify for, what your estimated payment could look like, and what loan programs may be available to you.

But your lender isn’t making the decision about what you should spend.

That’s your decision.

My job is to help you understand the real estate side of the equation so you can make an informed decision about the home you’re buying.

There is no prize for buying the most expensive house you can qualify for.

The goal is to find the right home at a payment that makes sense for your life.

Have a Question?

Buying a home comes with a lot of questions. You don’t have to figure everything out on your own.

Have a question about something you read here? Want to talk through your situation? Or just not sure what your next step should be?

I’m happy to help.

Schedule a Time to Talk With Karyn

No pressure. No obligation. Just straight answers.

Prefer to just send me a question?